To ensure green Sukuk gain international visibility at COP26, a group of high-profile international and national players have come together to form the High Level Working Group on Green Sukuk (HLWG) to direct investments into reducing greenhouse gas emissions. VINEETA TAN has the details.
Six entities have committed to becoming founding partners of HLWG: Her Majesty’s Treasury, Indonesia’s Ministry of Finance, the IsDB, the Islamic Finance Council UK (UKIFC), the London Stock Exchange Group and the Global Ethical Finance Initiative (GEFI).
“The UK has strong credentials in green and Islamic finance, and we are proud to be a founding country partner of the HLWG which launched at COP26 in Glasgow. Green Sukuk offer countries and companies an important route to secure investment for sustainable projects, so it’s important we work globally to kick-start and grow this market,” John Glen, the UK’s economic secretary to the Treasury and city minister, said.
The three-year initiative is focused on directing investments into green projects, with the aim of unlocking potential Islamic investments to facilitate the UN Sustainable Development Goals. UKIFC, in a United Nations Development Programme Indonesia-commissioned report, estimated that green and sustainability Sukuk could account for at least US$30 billion additional capital by 2025.
UKIFC and GEFI will serve as the secretariat. The group’s immediate priorities are to: place green and sustainability Sukuk on the agenda of the annual COP summits over the next three years; enhance existing established global standards to better align with the global Islamic finance industry; and address persistent challenges for green and sustainability Sukuk on the supply and demand side.
“The initiative will promote green Sukuk as an alternative financing instrument, which combines two principles that are much aligned, to a wider audience globally, and enabling issuers, not only tapping Sukuk investors but also SRI [sustainable and responsible investment] investors across the world,” shared Indonesia’s finance minister, Sri Mulyani Indrawati, who added: “We hope to be able to share our experiences and provide valuable precedents to the group, at the same time learning and apply best practices or initiatives for the improvement of green Sukuk.”